Beneficial Ownership Information Reports

Under the Corporate Transparency Act (CTA), most small businesses must file Beneficial Ownership Information (BOI) reports with the Financial Crimes Enforcement Network (FinCEN). Beneficial Owners are individuals who either own 25% or more of the company or exercise substantial control over its operations.

Companies that were established or registered before January 1, 2024 must file their initial BOI reports by January 1, 2025. (Reporting companies created or registered to do business in the United States on or after January 1, 2024 and before January 1, 2025, must file initial BOI reports within 90 days after receiving actual or public notice that creation or registration is effective).

Exempt Entities

Large operating companies, which are companies that employ 21 or more full-time employees AND have over $5M in annual sales as listed on their tax return (must meet both requirements), are exempt from the BOI reporting requirements. Inactive and public companies are also exempt. The following online tool can be used to identify if your company qualifies for exemption:

The following 23 categories of entities are exempt from the reporting requirement:

1. Securities Issuers: Entities registered under the Securities Exchange Act of 1934
2. Governmental Authorities: Entities exercising governmental authority in the U.S. or tribal governments
3. Banks: Federally insured or regulated banks
4. Credit Unions: Federal and state credit unions
5. Depository Institution Holding Companies: Bank or savings and loan holding companies
6. Money Services Businesses: Registered money transmitters or money services businesses
7. Securities Brokers or Dealers: Registered under the Securities Exchange Act
8. Securities Exchanges and Clearing Agencies: Registered with the SEC
9. Other SEC-Registered Entities: Those registered under the Securities Exchange Act
10. Investment Companies and Advisers: SEC-registered investment companies or advisers
11. Venture Capital Fund Advisers: Those filing required disclosures with the SEC
12. Insurance Companies: Regulated insurers
13. State-Licensed Insurance Producers: With a physical U.S. presence
14. Commodity Exchange Act Entities: Registered futures and commodities participants
15. Accounting Firms: Registered under the Sarbanes-Oxley Act
16. Public Utilities: Providing regulated utilities like power or water
17. Financial Market Utilities: Designated by the Financial Stability Oversight Council
18. Pooled Investment Vehicles: Operated by exempt entities
19. Tax-Exempt Entities: Nonprofits under Section 501(c) or political organizations
20. Supporting Tax-Exempt Entities: Entities providing governance or financial support
21. Large Operating Companies: Meeting thresholds for employees, physical presence, and revenue
22. Subsidiaries of Exempt Entities: Owned by other exempt entities
23. Inactive Entities: Meeting strict criteria for inactivity since January 1, 2020

For businesses who do not qualify for exemption, failure to file BOI reports under the CTA can result in significant legal consequences and substantial fines. Fines can reach $10,000, and individuals responsible for non-compliance within a company can face possible criminal charges and jail time.

How To File

The good news is that filing BOI reports is relatively simple and painless. In addition to company information, such as name and address, reporting companies will generally need to provide the following information for each beneficial owner:

• name;
• date of birth;
• address; and
• the identifying number and issuer from either a non-expired U.S. driver’s license, a non-expired U.S. passport, or a non-expired identification document issued by a State (including a U.S. territory or possession), local government, or Indian tribe. If none of those documents exist, a non-expired foreign passport can be used. An image of the document must also be submitted.

BOI reports can be filed on the FinCEN website:

As always, please reach out to us at [email protected] or 858-565-2700 with any questions you might have regarding this matter.